Posted on 05/18/2006 6:52:36 PM PDT by Dubya
IRVING — Republican Gov. Rick Perry signed into law today legislation that restructures the state business tax to help pay for public schools and accompanies a major property tax cut.
The measure is a major component of Perry's plan to revamp the way Texas pays for public education before a court-ordered deadline of June 1. The new law will help deliver a record $15.7 billion property tax reduction over three years, Perry said.
"It is the largest of its kind in America and significantly reduces the impact of Robin Hood," he said, referring to a state system that distributes some money from wealthy districts to poorer ones.
The measure is one of five school-finance bills passed during a 29-day special session that adjourned Monday.
"Our entire school finance plan will lead to better schools, a stronger economy and a better future," he said before signing the bill.
The law establishes a $3.4 billion tax expansion for next year and changes the state's business tax so more companies have to pay it.
Perry praised the law as a reliable source of funding for schools and fairer to employers than the previous loophole-ridden franchise tax.
The old tax system allowed businesses with good accountants to avoid paying taxes, meaning other businesses carried an unfair load, school districts struggled and local school property taxes skyrocketed, Perry said.
Assorted business groups, including manufacturers, retailers and service industry companies, endorsed the new business tax.
The legislation levies a tax on 1 percent of a company's gross receipts while retailers would pay at a rate of 0.5 percent. It allows deductions for either the cost of goods or employee benefits such as salary and health care.
Perry said the deductions serve as an incentive by rewarding businesses for offering additional benefits to their employees.
Businesses who hire illegal immigrants couldn't claim those tax deductions and face federal sanctions. However, policing for companies who hire undocumented workers would remain the federal government's responsibility.
Sole proprietors and general partnerships are exempt from the tax, as well as businesses whose gross receipts total $300,000 or less and those whose tax bill is less than $1,000.
Independent gubernatorial candidate Carole Keeton Strayhorn, also the state's chief financial officer, criticized the tax measure. While it requires some 200,000 additional businesses to pay taxes, it doesn't pay for the promised property tax cuts, she said.
The $2,000 teacher pay raise is small, and the property tax relief would vanish quickly, Strayhorn said in a release Thursday.
"This law leaves Texans with a $23 billion hot check," she said. "It is bad public policy, and I will blast it off the books after I am elected governor."
On Thursday, Perry said some of those opposing the plan are trying "to keep from paying their fair share."
Republican Rep. Dan Branch of Highland Park said any problems in the bill can be addressed in the 2007 legislative session because some businesses will have had a chance to analyze its effects by then.
State Rep. Jim Keffer, an Eastland Republican who sponsored the measure, joined Perry for the bill-signing in Brownwood. Then Perry planned to travel around the state holding ceremonial signings of the same bill.
The governor hasn't yet signed any of four other bills in the school finance package, which include a $2,000 across-the-board pay raise for teachers, more teacher performance bonuses and additional money per high school student.
Under the school finance plan, property taxes on the average-priced Texas home would drop by nearly $2,000 over the next three years.
Districts would get to keep nearly a $1 billion more from property taxes by 2008. Also, many districts wouldn't have to pay in some of their tax revenues to the state.
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The business tax bill is HB3.
After all, got to cover those illegals, their kids need education too.
"It is the largest of its kind in America and significantly reduces the impact of Robin Hood," he said, referring to a state system that distributes some money from wealthy districts to poorer ones.I like to call it "Robbin' My 'Hood".
Thats for sure. Lot of the criminals around here.
Wow...Rick Perry...how very Republican of you.
LOL Thats a good one.
Good one.
I could name names of tons of Texas construction companies that hire illegals. This is great!
She gets more like a bad joke everyday. No one will have to say or do anything for her to beat. She is doing it to herself.
Everyone might want to pay attention to the Texas govenor's race. Kinky Friedman might actually have a chance. Perry has just presided and is governing over a wreckless budget that he thinks can be tamed by higher business taxes.
WAKE UP, PEOPLE, BEFORE IT'S TOO LATE!!!!!
>>>"The law establishes a $3.4 billion tax expansion for next year and changes the state's business tax so more companies have to pay it."
This is quite some tax reduction!
Does anyone know if this will affect (lower) property taxes on Texas commercial rental property?
Muleteam1
Its my understanding that it will.
What a joke.
I believe so. Texas is a nondisclosure state which makes commercial property hard to appraise. Generally speaking commercial is 50-70% of true value. While, on the other hand homeowners are taxed nearer to 95% of value. Most homes are comparable in a neighborhood and they have access to MLS. This tax law is a boom to investors of apartment and office buildings since most ownership is held in general partnerships, thus tax exempt.
I saw Kinky on Larry King last weekend. He's a real character; Texas-like character.
Yep it make some who get away with paying no tax pay some. A great move by the Gov..The the Real Property owners don't have to pay their share.
I like this.
Me too. :^)
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